Understanding the SegWit2x Hard Fork and the Disagreement Regarding It

The SegWit2x could be the largest change to the Bitcoin’s underlying blockchain up until now. It is also said to be the least understood of them all.

To understand the SegWit2X, we must first understand Bitcoin. It’s a digital currency that is best described as a set of codes to deliver data (the bitcoins) in predefined amounts (or blocks) that follow a storage sequence known as a blockchain or a set of specific computers around the world. Bitcoin is decentralized in the sense that many people choose to be on its network, running its software and follow the same rules to keep it functional.

A Change in the Way Bitcoin Operates

A change in the rules followed by the blockchain software is called a fork. It essentially changes the way that the blockchain software operates. More specifically, the SegWit2x Hard Fork would allow the size of the data (blocks) that passes through the network regularly and stored in the software to increase from 1MB to 2MB.

This fork is different from others like the bitcoin cash and bitcoin gold hard forks. Users may be happy with the way things are going, for example, they don’t have to pay much attention, and their transactions wouldn’t be disturbed.

That is to say if the users held Bitcoin on a particular exchange or wallet, they would receive the new cryptocurrency (Bitcoin cash or Bitcoin gold) without their Bitcoins being affected. This may not be true in the case of the SegWit2x as the smoother returns may not be entirely possible with this particular fork.

This is why there is much disagreement between different stakeholders of Bitcoins.

The Disagreement

SegWit2x plans to keep Bitcoin users on the same blockchain whereas the previous hard forks split the network into entirely new blockchains. This means that if some miners upgrade their software, there will be 2 versions of the Bitcoin, one legacy and one that follows SegWit2x’s protocol. Both will be using the same blockchain but will be 2 separate cryptocurrencies.

Miners and startups are at an advantage because the former runs the hardware for the blockchain and gains profits from the rewards bitcoin offers. The latter will be able to provide services to Bitcoin users to buy, store and sell bitcoins as well as spend them.

They say that Bitcoin should be able to compete with the US$ and other regular currencies and that would be possible if they were used as a means of exchange. If Bitcoin doesn’t, some other digital currency will as some already are including Ripple’s XRP, which is already being used for streamlining payments globally, this means they’re capturing the market share of what should have been Bitcoin’s all along. Bitcoin has the hidden capacity but the current updates brought about by August are not enough to realize the true potential and capacity of the Bitcoin.

Developers and Node operators are not in favor of the SegWit2x as they say that Bitcoin is a store of value while not ignoring the possibility of letting it be used as a payment network. They think that the SegWit2x is very risky and gives too much power to the startups and miners, which goes against the decentralized ideology of cryptocurrencies.

The SegWit2x change is likely to happen somewhere in November, 2017. Only then will the uncertain future for the Bitcoin be revealed.